Assembling coated membrane vesicles (CVs) during cellular processes such as synaptic transmission and protein traffic requires coordinated interactions between transmembrane cargo molecules and coat proteins, rapidly shaping the membrane into a highly curved CV that encapsulates a specific cargo. Defects in CV assembly and exploitation of CVs by pathogens lead to devastating diseases that cumulatively impact hundreds of millions of patients each year. While the molecular components and structures of CVs have been largely identified, critical physiological questions remain unanswered. Specifically, determining how the coat physically senses and adapts to cargo and elucidating the criteria that determine the size and cargo content of CVs are key remaining steps toward understanding the role of CV assembly in human disease. To address these questions, the objective of the proposed work is to quantify and compare the energetic costs of cargo encapsulation with the energetic contributions of coat assembly during CV formation. Recent work in our lab has demonstrated that the energetic cost of encapsulating cargo molecules increases exponentially with their concentration on membrane surfaces, a consequence of increased steric pressure among them. Similarly, our work has shown that concentrating coat components to the levels found in CVs creates a substantial steric pressure on the opposite membrane surface that drives membrane curvature, in opposition to pressure from cargo molecules. In contrast to current understanding, these results suggest that concentrating cargo molecules, rather than bending membranes, represents the major physical barrier to forming CVs. These observations lead to the central hypothesis that assembly of the coat lattice sterically confines molecular components on the cargo and coat sides of the membrane, setting up a competition between opposing membrane surface pressures that collectively shape nascent CVs. Using assembly of clathrin-coated pits as a model system, experiments in three aims will test this hypothesis. Using minimal membrane systems and quantitative optical assays, experiments in Aim 1 will measure the energetic cost of cargo encapsulation as a function of cargo concentration and molecular mass. In contrast, experiments in Aim 2 will use minimal systems to quantify and compare the energetic drivers of cargo encapsulation, including coat polymerization, steric pressure among coat components, and hydrophobic insertion. Finally, Aim 3 will probe the physiological balance between the costs and drivers of cargo encapsulation in living cells. These experiments will determine the impact of cargo concentration and molecular weight on the size and coat composition of CVs. Using innovative methodologies to quantify the energetics of CV formation, the significance of the proposed work will be a critical evaluation of the extent to which an energetic competition between cargo and coat components determines the size and molecular content of CVs, a key step toward understanding and addressing pathologies arising from misregulation, mutation, and pathogenic exploitation of CV assembly.